It was used for many functions, serving as a radio/visual relay for Earth, a stopping point for deep space ships, a research station and an early warning monitor for stellar activity such as meteorite storms. It was armed with an x-ray laser and a force field.
In 2079, Cybermen invaded the station, intending to use it as a beacon for their invasion fleet. The Second Doctor freed the crew from the Cybermen's hypnotic control and destroyed their fleet. (TV: The Wheel in Space, AUDIO: The Dying Light)
Zoe Heriot was returned by the Time Lords to Space Station W3 at a moment in time before she went away in the TARDIS with the Doctor and Jamie McCrimmon (thus erasing her memories of all bar her first adventure with them), where she was met by Tanya Lernov and for a moment had the feeling of having forgotten something important, which she quickly dismissed. (TV: The War Games)
She later had another adventure with the Doctor in his sixth incarnation, but because of the conditioning placed on her mind, she did not retain these memories when he brought her back to the space station. (AUDIO: Legend of the Cybermen).